TORONTO, Nov. 30, 2018 (GLOBE NEWSWIRE) -- PRESS RELEASE -- Canopy Growth Corporation and Canopy Rivers Inc. have announced the closing of the previously announced restructuring transaction with TerrAscend Corp., pursuant to which TerrAscend restructured its share capital by way of a plan of arrangement under the Business Corporations Act (Ontario).
The announcement follows TerrAscend’s special meeting of shareholders held on Nov. 27, 2018, where holders of common shares in the capital of TerrAscend voted to approve the Arrangement.
To accommodate TerrAscend’s strategic pursuits, while also maintaining strict compliance with industry regulations and the policies of the various securities exchanges on which they are listed, Canopy Growth and Canopy Rivers Corporation agreed to restructure their investments in TerrAscend and exchange their Common Shares for exchangeable shares in the capital of TerrAscend that will only become convertible into Common Shares following changes in U.S. federal laws regarding the cultivation, distribution or possession of marijuana, the compliance of TerrAscend with such laws and the approval of the various securities exchanges upon which Canopy Growth and Canopy Rivers are listed. The Exchangeable Shares are not listed on a recognized stock exchange and, until converted into Common Shares, the holders thereof will not be entitled to voting rights, dividends or other rights upon dissolution of TerrAscend.
Prior to the arrangement, Canopy Growth and Rivers each held 11,285,456 Common Shares and warrants to purchase 9,545,456 Common Shares, representing approximately 11.7 percent of the issued and outstanding Common Shares on a non-diluted basis and approximately 19.7 percent of the issued and outstanding Common Shares on a partially diluted basis. Based on the closing price of the Common Shares on the CSE on the date immediately prior to the arrangement, the value of the Common Shares and warrants exchanged by each of Canopy Growth and Rivers was approximately $133 million. Given that the growth, cultivation, production and sale of cannabis is not currently federally legal in the U.S. and there can be no assurances that it will be legalized, Canopy Growth and Canopy Rivers expect to write down their investments in TerrAscend and record a loss in the third quarter related to the reorganization, unless circumstances change.
Pursuant to the arrangement, Canopy Growth and Rivers each received 19,445,285 Exchangeable Shares, resulting in Canopy Growth and Rivers each holding 50 percent of the issued and outstanding Exchangeable Shares. Canopy Growth and Rivers do not hold any other securities in the capital of TerrAscend.
Canopy Growth and Canopy Rivers do not engage in any U.S. cannabis-related activities as defined in Canadian Securities Administrators Staff Notice 51-532. While Canopy Growth and Canopy Rivers have an interest in TerrAscend, TerrAscend has not engaged in cannabis-related activities in the U.S. to date. Cannabis remains a Schedule I drug under the United States Controlled Substances Act, making it illegal under federal law in the U.S. to cultivate, distribute or possess cannabis.
Full details of the arrangement are set out in the management information circular of TerrAscend dated Oct. 24, 2018. A copy of the Information Circular and the early warning report to be filed by Canopy Growth and Canopy Rivers in connection with the acquisition of the Exchangeable Shares can be found under TerrAscend’s profile on SEDAR at www.sedar.com or by contacting Canopy Growth or Canopy Rivers as set out below. Canopy Growth’s head office is located at 1 Hershey Drive, Smith Falls, Ontario, K7A 0A8, Canopy Rivers’ head office is located at 40 King Street West, Suite 2100, Toronto, Ontario M5H 3C2 and TerrAscend’s head office is located at P.O. Box 43125, Mississauga, Ontario L5B 4A7.
